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Case Number

D.B Civil Misc. Writ No. 112/65 of 1965

Attorney(S)

Hastimal Parakh, for petitioner
M.M Vays, Additional Advocate General, for State.

Judges

D.M. Bhandari
Mr. Vedpal Tyagi

Acts

provisions of this Act and the Scheme. Section 19A 19-A.
provisions of the Employees' Provident Funds Act, 1952
Section 5 5. Employees' Provident Fund Schemes: (1)
provisions contained in Section 5(1)
Clauses (1) to (v) of Section 19-A.
Section 1 1 Short

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Smart Summary

Judgment Summary

Factual and Procedural Background

This is a writ petition under Article 226 of the Constitution challenging the applicability and retrospective operation of the Employees' Provident Funds Act, 1952 (the Act) and the Scheme framed under Section 5 to the petitioner, a partnership firm established on 1 January 1955 manufacturing umbrella ribs, handles, sticks and accessories and operating a factory at Falna.

Sequence of key events disclosed in the opinion:

Regional Provident Fund Commissioner (RPC) initially informed the petitioner by letter dated 16 November 1961 that the petitioner was not covered by the Act and the Scheme.
RPC later revised his view (letter dated 16 November 1962) that the petitioner’s industry fell within items of Schedule I. There followed exchanges of letters.
Petitioner applied under Section 19A to the Central Government on 9 February 1964 seeking a decision whether its establishment was governed by the Act.
Central Government (Under Secretary) sought petitioner’s written views on 2 June 1964 as to whether its establishment came under "Electrical, mechanical or general engineering products." The petitioner denied that it did.
Central Government finally decided by letter dated 5 September 1964 that the petitioner’s establishment was a factory engaged in the scheduled industry "Electrical, mechanical and general engineering products".
RPC thereafter asked the petitioner to implement the provisions of the Act and Scheme from 31 December 1957, and threatened recovery of contributions and prosecution with penalty; the petitioner asserted willingness to implement from 1 July 1962 but not earlier.
Petitioner sought writ relief quashing the Central Government’s decision of 5 September 1964 and restraining enforcement against it, or alternatively protection from retrospective enforcement prior to the date it accepted liability.

Legal Issues Presented

Whether the petitioner’s establishment fell within Schedule I (specifically under "Electrical, mechanical or general engineering products") and was therefore covered by the Act and the Scheme.
If covered, from what date could the Scheme be validly applied to the petitioner — in particular, whether the Scheme could be applied retrospectively from 1 January 1958 (when the Scheme became operative) or from an earlier or later date.
Whether, given the RPC's earlier communication that the petitioner was not covered and the petitioner’s invocation of Section 19A, the Central Government’s clarification dated 5 September 1964 could have retrospective effect such as to make the petitioner liable for contributions and penalties for periods prior to 1 July 1962 (the date from which the petitioner conceded it could be bound).

Arguments of the Parties

Petitioner's Arguments

The petitioner contended that it did not fall within the industries listed in Schedule I and did not manufacture electrical, mechanical or general engineering products.
Because doubt as to applicability was only resolved by the Central Government's letter dated 5 September 1964, the Scheme could not be applied to the petitioner from 1 January 1958.
The petitioner stated it was willing to implement the Scheme from 1 July 1962 and had conveyed that proposal to the RPC, but the RPC refused to accept it.
The petitioner sought orders quashing the Central Government's decision of 5 September 1964 and restraining enforcement of the Act and Scheme against it; alternatively sought protection against enforcement for any period prior to 1 July 1962.

Respondents' Arguments

The respondents (via Additional Advocate General) did not dispute the factual sequence but argued that the petitioner’s industry falls within Schedule I under the head "Electrical, mechanical or general engineering products."
They maintained that, by virtue of Section 16(1)(b) (as argued in the opinion), the provisions of the Act and the Scheme applied to the petitioner from 1 January 1958 (the date when the Scheme became operative), and earlier communications did not affect that operation.
The respondents relied upon the scheme and the statutory provisions to contend retrospective operation to the operative date of the Scheme was appropriate despite earlier RPC correspondence.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Aluminium Corporation of India Ltd. v. Regional Provident Fund Commissioner and Ors. (Calcutta High Court)	Interpreting the scheme and concluding that specification for applicability requires clarity; supports view that doubt must be removed before an establishment can be deemed specified.	The Court noted that the Calcutta High Court arrived at the same conclusion (that specification requires removal of doubt) after considering the scheme; the present Court relied on Section 5(1) but found that the Calcutta decision reached a similar result.
T.R. Raghava Iyengar & Co. v. Regional Provident Fund Commissioner (Madras) AIR 1963 Mad. 236	Interpretation consistent with the view that specification/clarification is necessary before the Scheme is held applicable to a particular establishment.	The Court recorded that the Madras High Court reached the same conclusion as to the need for specification/clarification before the Scheme applies to a particular establishment.
Annamalai Mudaliar and Bros. v. Regional Provident Fund Commissioner, Madras	Cited as part of authorities showing divergence on interpretation of Section 19A—whether it can be invoked by persons or only by administrative authorities.	The Court grouped this case among authorities evidencing divergence of judicial opinion; it did not resolve that controversy here because facts (RPC earlier opinion and petitioner invoking Section 19A) made invocation appropriate.
Kapurbhimbar Union v. Regional Provident Fund Commissioner and Anr. ILR 1965 (1) Punj. 321	Also cited in relation to divergent judicial views on the scope of Section 19A.	Cited as an example of the divergence; the Court stated it would not enter into the larger controversy for purposes of the present case.
Kunhipaly v. Regional Provident Fund Commissioner, Trivandrum and Ors. 1966 (1) LLJ 642	Another authority cited on the question whether Section 19A may be invoked by individuals or only by administrative authorities.	Listed among cases reflecting divergent views; the Court avoided adjudicating the broader interpretive dispute, relying instead on the specific facts before it.
The Nagpur Glass Works Ltd., Nagpur City v. Regional Provident Fund Commissioner and Ors.	Cited in the same context of divergence concerning Section 19A's invocation and scope.	Used as an example of conflicting authorities; the Court observed that it need not decide the controversy because RPC himself had initially taken the view petitioner was not covered.

Court's Reasoning and Analysis

The Court's analysis proceeded step-by-step from statutory text and the factual matrix recorded in the materials:

Key statutory provisions identified: Sections 1 (application), 5 (power to frame Scheme and specify establishments), and 19A (power to remove difficulties / resolve doubts).
The Court described Section 5(1) as the "key section" because it empowers the Central Government to frame and notify the Scheme and to "specify the establishments or class of establishments to which the Scheme shall apply," after which a fund shall be established.
The Court emphasized the meaning of the word "specify" (referencing the ordinary dictionary meaning): specification requires definite and explicit naming or categorization so that there is no uncertainty as to whether a particular establishment is covered.
The Court noted that the notification framing the Scheme had not named the petitioner; instead the Scheme was indicated to apply to establishments to which the Act applied under Section 1(3) or Section 3. This left room for doubt as to whether a particular establishment (the petitioner) was specified.
For situations of doubt as to whether an establishment is within Schedule I, Section 19A provides a procedure whereby the Central Government may make final orders to remove the doubt. The Court held that where such uncertainty exists, the establishment can only be treated as specified after the doubt is removed under Section 19A.
Applying these legal principles to the facts: because the RPC initially wrote (16 Nov 1961) that the petitioner was not covered, and only after further proceedings the Central Government clarified applicability by letter dated 5 September 1964, the Court concluded that the doubt was removed only on that later date.
The Court acknowledged prior judicial authority (Calcutta and Madras High Courts) that reached similar conclusions about the need for specification/clarification, and it noted a divergence of opinion in other cases on who may invoke Section 19A. However, because the RPC himself had at one stage held the petitioner not covered, the petitioner had a legitimate ground to invoke Section 19A and the Court found it difficult to hold that the petitioner could not do so.
The petitioner, however, had conceded that it could be bound by the Scheme from 5 September 1964 and even from 1 July 1962. Given that concession, the Court limited relief to protect the petitioner from enforcement prior to 1 July 1962.

Holding and Implications

Core Holding: The writ petition is allowed in part. The Court issued a writ directing the respondents not to take any action against the petitioner on the basis that it must implement the provisions of the Act and the Scheme prior to 1 July 1962, and further directed that no penalty be recovered from the petitioner for not implementing the Scheme before 1 July 1962.

Implications and immediate consequences:

The direct effect is protective relief for the petitioner: respondents are restrained from enforcing the Act and Scheme against the petitioner for any period prior to 1 July 1962, and from recovering penalties for that period.
The Court did not grant the broader relief sought to quash the Central Government's decision of 5 September 1964; it accepted the petitioner's concession and narrowed relief accordingly.
The opinion does not announce a broader new precedent beyond its application of Sections 5 and 19A to the present facts. The Court relied on existing authorities and statutory interpretation to determine that specification requires removal of doubt under Section 19A before an establishment can be treated as specified for earlier application of the Scheme; however, because the petitioner conceded liability from 1 July 1962 (and acceptance from 5 September 1964), the ruling is limited to preventing retrospective enforcement prior to 1 July 1962.

No order as to costs.

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Mahaveer Metal Manufacturing Co., Falna v. Regional Provident Fund Commissioner, Jaipur

1. This is a writ petition under Article 226 of the Constitution. The facts giving rise to this petition are as follows.

2. The petitioner is a partnership firm carrying on its business at Falna of manufacturing umbrella ribs handles, sticks & accessories and it also owns a factory for that purpose. This concern was established on 1st January, 1955 after the coming into force of the Employees', Provident Funds Act,1952(here in after called the Act,) A question arose whether the provisions of the Act & the scheme framed under Section 5 thereof by the Central Government were applicable to the petitioner or not. The Regional Provident Fund Commissioner vide his letter No. PF/f1/Miscellaneous/1/4 Fact/60/10603 dated 16th November,1961 (Ex. 1) wrote to the labour officer Jodhpur, in reply to his letter No. 6276 dated 3-11-61 that the petitioner was not coverd by the provisions of the Act and the scheme framed there under. It is alleged that subsequently the Regional Provident Fund Commissioner by his letter dated 19th November, 1961 made certain enquiries from the petitioner to supply information regarding petitioner business to which the petitioner replied that as the petitioner did not come within the purview of (he Act or the scheme framed thereunder, it was not essential to send the requisite information. Thereupon the Regional P.F. Commissioner by his letter dated 16th November, 1962 took the view that the industry carried on by the petitioner fell within item No. 20 and 25 of Schedule 1 of the Act. Thereafter there was exchange of series of letters between the petitioner and the Regional Provident Fund Commissioner. The petitioner then made an application under Section 19A of the Act on 9th February, 1964 to the Central Government for its decision whether the industry carried on by the petitioner firm was governed by the provisions of the Act or not. On this on 2nd June, 1964 the Under Secretary to the Government of India sent a letter to the petitioner firm to send its views in writing regarding to the fact whether the establishment of the petitioner came under the term "Electrical, mechanical or general engineering products." On this the petitioner made a detailed representation that the petitioner firm did not fall under that head. By its letter dated 5th September 1964, the Central Government finally decided that the establishment of the petitioner was a factory engaged in the scheduled industry "Electrical mechanical and general engineering products". After this decision, the Regional Provident Fund Commissioner asked the petitioner to implement the provisions of the Act and the scheme framed, there under from 31th December 1957. The petitioner's case is that the said officer is threatening to take proceedings for his prosecution and for the recovery of the contributions to the fund with 25% penalty through coercive process, inspite of the fact that the petitioner is not an industry engaged in the manufacture of any of the items mentioned in Schedule 1 and that it is not manufacturing any electrical, mechanical or general engineering products. It is further stated that inspite of this, the petitioner was willing and ready to implement the scheme from 1st July 1962 and that the petitioner had conveyed its proposal to the Regional Provident Fund Commissioner in order to cut short the unpleasant controversy which was persisting between the Regional Provident Fund Commissioner and the petitioner, but the said officer did not accept the proposal. It is also submitted that the decision of the Central Government that the petitioner was covered by the provisions of me Act and the scheme framed thereunder was conveyed to it by letter dated 5th September, 1964, and it is only after this letter that the doubt regarding the applicability of the provisions of the Act and the scheme framed thereunder was removed and there after the petitioner has committed no default. It is therefore prayed that an order, direction or writ be issued against the respondents quashing the decision of the Central Government dated 5th September, 1964 and restraining them from enforcing the provisions of the Act and the scheme framed thereunder against the petitioner.

3. The material facts are not disputed by the Additional Advocate General appearing on behalf of the respondents. It is, however, urged that the industry carried on by the petitioner falls under Schedule I under the head "Electrical, mechanical or general engineering products," and the provisions of the Act and the scheme framed thereunder are applicable to the petitioner from the date when the scheme became operative, that is, from 1-1-1958, by virtue of Section 16(1)(b) of the Act. It is, however, conceded that the Regional Provident Fund Commissioner had informed the petitioner by letter dated 16th November, 1961 that the petitioner was not covered by the provisions of the Act and the scheme framed thereunder and that later on the petitioner made a representation to the Central Government and the Central Government informed the petitioner by letter dated 5th September,1964 that the establishment of the petitioner was a factory engaged in the scheduled industry "Electrical, mechanical and general engineering products." It is, however, urged that these facts do not in any way affect the operation of the provisions of the Act and the scheme against the petitioner and that the scheme should be deemed to be held operative against the petitioner from 1st January, 1958.

4. It is conceded before us by learned Counsel for the petitioner that he had no grievance if the provisions of the scheme are applied to him from 1st July, 19621 But it is vehemently argued that under the law the scheme could not be applied to the petitioner from 1st January, 1958 because the doubt as to whether the establishment of the petitioner was a factory engaged in any industry specified in Schedule 1 was only clarified by the Government by its letter dated 5th September 1964. The material provisions of the Act which we need consider in connection with this argument are section 1, 5 and 19a, the relevant portions of which run as follows:

Section 1 1 Short title, extent and application (1) ....

(2) ....

(3) Subject to the provisions contained in section 16, it applies-

(a) to every establishment which is a factory engaged1 in any industry specified m Schedule 1 and in which twenty or more persons are employed, and

(b) to any other establishment employing twenty or more persons or class of such establishments which the Central Government may,; by notification in the Official Gazette, specify in this behalf:

Provided that the Central Government may after giving not less than two months notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than twenty as may be specified in the notification.

Section 5

5. Employees' Provident Fund Schemes:

(1) The Central Government may, by notification in the Official Gazette, frame a scheme to be called the Employees' Provident Fund Scheme for the establishment of provident funds under this Act for employees or for any class of employees and specify the establishments or class of establishments to which the said Scheme shall apply and there shall be established, as soon as may be after the framing of the Scheme, a fund in accordance with the provisions of this Act and the Scheme.

Section 19A 19-A. Power to Remove Difficulties:

If any difficulty arises in giving effect to the provisions of this Act, and in particular, if any doubt arises as to-

(1) Whether an establishment which is a factory, is engaged in any industry specified in Schedule I;

(ii)to(v) ....

the Central Government may, by orders make such provisions or give such direction, not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient, for the removal of the doubt or difficulty in such cases, shall be final.

5. For giving effect to the provisions of the Act, Section 5 is the key section. It provides that the Central Government may by notification in the official Gazette frame a scheme for the establishment of Provident Fund for employees or for any class of employees It further provides that the Central Government may specify the estiblishments or class of establishments to which the said scheme shall apply and then it is laid down that after the framing of the scheme, a fund in accordance with the provisions of the Act and the scheme will be established.

6. We proceed on the basis that the petitioner has an establishment which is a factory engaged in the industry of manufacturing an engineering product and falls within the list of industries mentioned in Schedule I and that in this industry more than 50 persons are employed. It may also be taken that a scheme has been framed as envisaged under Section 5(1) of the Act by the Central Government and notified in the official Gazette. Section 5(i) however provides that the scheme shall apply only when the Central Government specifies that the establishment of the petitioner is the one to which the scheme is applicable. What was done in this case was that the notification by which the scheme was notified further mentioned in paragraph 3(i) of Chapter I that the scheme would apply to a factory and establishment to which the Act applies or is applied under Sub-section (3) of Section 1 or Section 3 of the Act. Thus while specifying in this manner the establishment of the petitioner was not mentioned by name. At one stage a question arose whether the petitioner's establishment fell within the class of establishments mentioned in that paragraph, and the Regional Provident Fund Commissioner took the view that it did not fall within paragraph 3 and notified the petitioner by letter dated 16th November, 1961 that the petitioner was not covered by the provisions of the Act and the scheme framed thereunder, but later on, the Regional Provident Fund Commissioner revised his view and thereupon the petitioner made a representation to the Central Government and the Central Government called for certain information from the petitioner and eventually decided by letter dated 5th September, 1964 that the petitioner firm was governed by the Act and the scheme was applicable to it.

7. The scheme of the Act is that the Central Government is to draw a scheme and notify it and then specify the establishment or class of establishment to which the said scheme shall apply. The word "specify" is significant. Its meaning as given in Oxford English Dictionary is to mention, speak of, or name some thing definitely or explicitly; to set down or state categorically or particularly; to relate in detail. Now cases may arise in which an establishment is not named individually and it may be doubtful whether it falls within the class of establishments to which the scheme has been made applicable by the Central Government. For removing this doubt, a procedure has been laid down under Section 19-A and it is that the Central Government may give such direction, not inconsistent with the provisions of the Act as appear to it to be necessary or expedient for the removal of the doubt. This doubt was finally removed in the instant case by the order of the Central Government to the petitioner vide its letter dated 5th September, 1964. The question is whether till such doubt is removed, it can be said that the 'Petitioner' establishment must be taken to be specified as the one to which the scheme will be applicable. The word "specify" means that there should be no room for uncertainty in the matter of mentioning or naming the establishment to which the scheme is to be applied. There must be definiteness in the order of the Central Government applying the scheme that it will apply to the case of a particular establishment. If any ground of uncertainly exists, if will be deemed that a particular industry has been specified only after that doubt or uncertainty has been removed by following the procedure laid down in Section 19-A of the Act (para 7) In this case this happened on 5th Sep., 1964. To this conclusion the Cal. High Court has arrived in Aluminium Corporation of India Ltd. v. Regionol Provident Fund Commissioner and Ors. , after considering the scheme. Our approach is slightly different and we mainly rely on the provisions contained in Section 5(1) in this connection. The same conclusion was reached by the Madras High Court in T.R. Raghava Iyengar and Co. Petitioner v. The Regional Provident Fund Commissioner, Madras, Respondent AIR 1963 Mad. 236.

8. There is of course some divergence of judicial opinion in the interpretation of Section 19-A of the Act. In some cases, it has been held that the provision of this Section can only be invoked by the authorities administering the provisions of the Act and the scheme, while in other cases it has been urged that this provision can also be invoked by any person who feels doubtful as to whether his establishment is a factory or not under Clauses (1) to (v) of Section 19-A. In this connection we may refer to the following cases:

Annamalai Mudaliar and Bros., Petitioner v. Regional provident Fund Commissioner, Madras and Ors. Respondents , Kapurbhimbar Union v. The Regional Provident Fund Commissioner and Anr. ILR 1965 (1) Punj. 321, Kunhipaly v. Regional Provident Fund Commissioner, Trivandrum, and Ors. 1966 (1) LLJ 642, The Nagpur Glass works Ltd., Nagpur City v. The Regional Provident Fund Commissioner and Ors. . We need not enter into this controversy because in this case, the Regional Provident Fund Commissioner himself at one stage was of opinion that the petitioner's factory did not fall within the provisions of the Employees' Provident Funds Act, 1952 and the scheme framed thereunder, though he changed his opinion latter on. In such a situation, the petitioner had valid ground to get the doubt clarified from the Central Government under Section 19-A of the Act and it is very difficult for us to hold that even in such a situation, Section 19-A could not have been invoked by the petitioner.

9. The petitioner has candidly conceded that he may be held bound by the provisions of the Act and the scheme not only from 5th September, 1964 but even from 1st July, 1962. In these circumstances, we are of opinion that the petitioner is entitled to a writ that the respondents may be directed net to take any action against the petitioner on the basis that he must implement the provisions of the Act and the scheme prior to 1st July, 1962.

10. We accordingly issue this direction. We are also of opinion that a further direction be issued against the respondents that they should not recover any penalty from the petitioner for not implementing the scheme before 1st July, 1962 we order accordingly. The writ petition is allowed as aforesaid. No order as to costs.

Mahaveer Metal Manufacturing Co., Falna v. Regional Provident Fund Commissioner, Jaipur

Judgment Summary

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments

Respondents' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Mahaveer Metal Manufacturing Co., Falna v. Regional Provident Fund Commissioner, Jaipur

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